Pakistani President Gen. Pervez Musharraf and Benazir Bhutto finalized a powersharing deal yesterday, paving the way for the exiled former leader to return to her homeland.

A senior Pakistani official said that General Musharraf would formally announce a “national reconciliation” accord today, dropping corruption charges against Ms Bhutto and lifting a ban on her serving a third term as prime pinister.

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“They have agreed on the draft and it will be issued by the president tomorrow. Benazir Bhutto has given her assent,” the Railways Minister Sheikh Rashid, a close confidant of the President, said last night. Ms Bhutto had been in talks with General Musharraf for months but a formal agreement had until now been blocked by the latter’s political allies, who feared being marginalised.

Farooq Naik, a leader of her Pakistan Peoples’ Party, confirmed that Ms Bhutto had approved the draft of the ordinance prepared by the government. “It is back with President Musharraf to sign it,” he said.

Earlier Ms Bhutto told reporters in London that if a deal was reached her party would not join the opposition boycott of Parliament.

Ms Bhutto, who was elected Prime Minister twice in the 1990s,, has pledged to return to Pakistan on October 18. She went into exile eight years ago to avoid arrest on corruption charges filed by Nawaz Sharif, her successor, who was himself later forced into exile.

Yesterday’s deal, actively supported by Washington, backs a constitutional amendment allowing her to serve a third term as Prime Minister. It also guarantees her immunity from prosecution over corruption charges. “The agreement says that there will be an across-the-board indemnity for public office holders between 1988 and 1999,” a senior government official said.